Airpark outpacing rest of commercial market

More than a quarter of Scottsdale's office space is vacant, and there are any number of see-through buildings with no cubicles, desks or workers.

But building owners in the Scottsdale Airpark are filling more office space than they're losing so far this year, and that's giving observers hope as they navigate through the wreckage.

"In the midst of a whole lot of carnage and bloodshed, the Scottsdale Airpark is the one area that's outperforming the market significantly," said Jim Mahoney, Trammell Crow Co. senior managing director.

Overall, the Valley office market held steady in the third quarter, with a vacancy rate of 25.9 percent, marking the first time in three years the quarterly rate had not increased.

But it is still nearly 15 percentage points higher than it was in 2006.

The year-to-date absorption - the amount of space gained or lost - was 147,610 square feet through the first three quarters. That compares with a loss of 897,916 square feet for the same period of 2009.

The airpark, with a vacancy rate of 28.6 percent, accounted for 487,494 square feet of absorption year-to-date, outperforming every other submarket, Mahoney said.

That signifies job growth for the airpark as new employers move into the area from out of state or relocate from within the market, he said.

That includes APL, a global-shipping company that announced its move last year from Oakland to a 66,000-square-foot office in the northeast Valley.

Another was Universal Technical Institute Inc., which is moving its headquarters across town to a 76,000-square-foot office at 16220 N. Scottsdale Road.

"Maybe we're starting to see signs of a recovery," Mahoney said.

"But it's pretty slow. You can measure it with a sundial."

Pat Devine, a CB Richard Ellis vice president, said the airpark submarket has been evolving, with the addition of larger buildings of up to six stories tall that can house larger companies.

The airpark, which includes the Kierland area, has grown to nearly 8.3 million square feet of office space, or about 11 percent of the total market.

Tenants are taking advantage of lower lease rates and high vacancies to move up the food chain to better buildings and better locations.

Jim Keeley, of Colliers International in the airpark, is hopeful about an improving business environment.

"Looking back historically, when things turn around, growth in the airpark is typically higher than any other submarkets," said Keeley, who is working on his annual report on airpark business due out in December.

Airpark jobs have fallen from a high of about 52,000 to 48,000 last year, Keeley said, adding that he is still researching where that number is now.